A reader refers me to a non-economist for *the* definition of a recession, in this YouTube video of a CNN segment (highlighting once again why I don’t typically watch YouTube videos), Regarding the recent CEA article on the definition of a recession, CNN commentator Chris Cillizza states:
“There is a technical definition [of a recession]: two straight quarters of negative economic growth.”
Now, I don’t want to be pedantic, so I’ll allow that there are multiple definitions of recession, but seriously, if you want to be “technical”, one should provide the most authoritative and technically correct definition for the United States. As previous commentators     have noted on this website and elsewhere, the most authoritative (given that their intellectual predecessors came up with the business cycle framework) is the NBER’s Business Cycle Dating Committee:
A: The NBER’s traditional definition of a recession is that it is a significant decline in economic activity that is spread across the economy and that lasts more than a few months. The committee’s view is that while each of the three criteria—depth, diffusion, and duration—needs to be met individually to some degree, extreme conditions revealed by one criterion may partially offset weaker indications from another. For example, in the case of the February 2020 peak in economic activity, we concluded that the drop in activity had been so great and so widely diffused throughout the economy that the downturn should be classified as a recession even if it proved to be quite brief. The committee subsequently determined that the trough occurred two months after the peak, in April 2020. An expansion is a period when the economy is not in a recession. Expansion is the normal state of the economy; most recessions are brief. However, the time that it takes for the economy to return to its previous peak level of activity may be quite extended.
In response to the question: “The financial press often states the definition of a recession as two consecutive quarters of decline in real GDP. How does that relate to the NBER’s recession dates?”, the BCDC writes:
Most of the recessions identified by our procedures do consist of two or more consecutive quarters of declining real GDP, but not all of them. In 2001, for example, the recession did not include two consecutive quarters of decline in real GDP. In the recession from the peak in December 2007 to the trough in June 2009, real GDP declined in the first, third, and fourth quarters of 2008 and in the first and second quarters of 2009. Real GDI declined for the final three quarters of 2001 and for five of the six quarters in the 2007–2009 recession.
As I have noted, even if one were to use the two quarter rule, the definition of what was or was not a recession would change over time as the GDP data got revised. An instance of this is exactly the 2001 recession, on which I wrote:
That positive reading [for 2001Q1] remained true through the second and third releases. The advance reading for 2001Q2 was also positive. This remained true through the second and third releases, and only in Q3 did the advance reading go negative, and remain so. However, the advance Q4 reading (1/30/2002) was positive — so there was no two-consecutive-quarter string of negative readings.
Only with the advance 2002Q2 release — incorporating the annual revision — did we get consecutive negative readings, in this case three quarters, starting Q1 running through Q3. The annual revisions adjust the preceding 5 years of GDP estimates (see here).
However, every five years, the BEA undertakes comprehensive revisions, incorporating the latest data. This once again changed the contours of GDP – as shown in Figure 1 and Figure 2. As the most recent series show, there are no consecutive quarters of negative growth. And yet, the NBER declared a recession running from (peak-to-trough) March 2001-November 2001, 2001Q-2001Q4 (recession announcement November 26, 2001, expansion announcement, July 17, 2003).
So alternative definitions of recession? Well there’s Jim Hamilton’s regime switching approach, which will — using the 2022Q1 number — determine if we’re in a recession regime or not when we receive the 2022Q2 advance release (see last post, index on FRED). And there are organizations (e.g., OECD), private firms (e.g., ECRI), and individual researchers (e.g., Chauvet-Piger) that provide recession chronologies.
So, bottom line – beware the definitive answer on an economic term from somebody who is not an economist by any definition (Mr. Cillizza received a BA in English).